Industry Opinion: Why I'm Optimistic About Blackbaud's Acquisition of Convio
(Tuesday, Jan. 17) — This morning's announcement that Blackbaud has agreed to acquire Convio has certainly made the day more interesting. A surprise to me and most of my colleagues, clients and partners, the press release has inspired more Twitter, e-mail and phone activity than I can remember in quite a while. Nearly everyone has asked the same questions: What will it mean? Is it a good thing or a bad thing?
Clearly it will take a while to understand the implications of the announcement and much longer to observe how the acquisition and subsequent integration — strategic, operational and technological — unfolds. But I'll risk it and offer two initial thoughts:
- The acquisition represents a colossal reshaping of the nonprofit technology landscape.
- There's lots of reasons to be extremely optimistic about the result.
Why it's big
If you're reading this article, you probably already know why the move is huge. But allow me to recap for a moment, with apologies to product managers at both companies for vastly oversimplifying the systems involved. Blackbaud is the de facto nonprofit technology standard when it comes to back-end systems. Simply put, it's a Raiser's Edge world out there. But its cloud products haven't gained as much traction, and its offering is a mixture of various home-grown and acquired solutions, from eTapestry to Kintera to NetCommunity to Sphere.
Convio, on the other hand, has become the standard for Web-based CRM, particularly in the rapidly growing advocacy and peer-to-peer fundraising spaces. Its move to integrate with Salesforce through Convio Luminate has brought powerful for-profit tools barrelling into the nonprofit space. However, Convio doesn't have the breadth or depth in back-end databases, nor the long history or massive installed user base that Blackbaud offers.
So the first reason this news is big is that these are the two leading players in nonprofit technology, by a large margin.
The second and more important reason is that because of the different competencies of the two companies, most clients use a mix of both systems. It is very common to find a Convio front end feeding a Blackbaud back end. It is also very common to find frustrated IT managers and fundraisers in the middle, trying to get the two systems to play well together. This acquisition not only brings with it the promise of more seamless integration, it also could vastly reduce administrative headaches throughout an organization — reducing multiple invoices, sales visits, service calls and so forth to one point of contact.
Why I'm optimistic
That same conclusion has already led some observers to worry about the move. I've read concerns that this change will reduce the leverage of the nonprofit buyer — leverage that many would say is already at a low point. In only six hours since the announcement, I've also heard worries that the acquisition will lead to higher prices, lower service, slower technological development and less choice.
I'll admit, those are legitimate concerns. But from my vantage point, I don't think they are realistic. Here's why.
First, many nonprofits already use — or wish they could use — both systems. Change comes slowly in our space, particularly when large systems (with correspondingly large financial outlays) are at play. Consolidating those products, designers and engineers is only going to benefit end users of the systems. I know of fundraisers at several large nonprofits who have literally agonized over the choice between Convio or Blackbaud. That's wasted time that can go back to mission.
Second, I like the mix of skills and competencies. Event 360's team works with both systems, so I know people at both companies. There are fantastic, smart people at both organizations. And like all competitors, they spend time worrying about each other. I can't wait to see what those teams do when they combine their talents. When both groups worry more about delivering social impact than keeping up with each other, we're all going to benefit.
Third, I think this will speed up, not slow down, technological development. This is probably a vast oversimplification, but my perception is that Blackbaud has always had the edge in technological robustness and service, while Convio has had the edge in speed and responsiveness. In November 2010 I got to see a preview of the next generation of Blackbaud's Friends Asking Friends system. I was completely blown away — blown away by the potential, by the power of the system and by how much Blackbaud had listened to Event 360's own best practices to include them in the system. The only disappointment came when I learned that the system wouldn't be widely available until 2013! To Blackbaud's credit, this is how it works — methodically. Blackbaud wants to get it right. But at the same time, the market is changing too quickly; nonprofits need help now. I think the addition of Convio's talent and products could add afterburners to Blackbaud's rollouts.
Fourth, there's enough market pressure to control prices. I think the concerns about "monopoly pricing" are vastly overexaggerated, for several reasons. One, if the new Blackbaud prices too high, it's going to encourage many nonprofits to look to low cost and open source alternatives. The strategists at Blackbaud are too smart for that. (And as a side note, to my friends at smaller technology companies — this acquisition is great news for you, too. One of you is going to become the new best alternative.) Two, my sense is that Blackbaud is more concerned about the Salesforces, Oracles and Microsofts of the world than the CiviCRMs. The market will shift, new alternatives will emerge, new standards will be created — but I don't think every NPO CFO needs to reach for the wallet.
What's to be determined
As I said at the beginning, there's still a lot to be ironed out.
- How long will systems integration take? Months or years?
- What will the product and service offering be? How will existing customers be treated with regard to potential new, integrated services?
- Will the acquisition (and subsequent integration timeline) actually slow down NPO buying decisions? This would be understandable, although a shame in my book — there is simply too much need to delay our pursuit of mission.
- How will the two company cultures mix together? From my experience, they aren't the same.
- Closer to my world, how will the new Blackbaud work with partners? Both companies have had evolving partner strategies — how will they work with companies like mine?
- Which companies and technologies will emerge as the clear second alternative?
We'll probably all have a lot to debate and wonder about in the next few weeks. Still, when it all comes down to it, I think this is a great move for the space. We're all trying to change the world — and the work is so, so difficult. To quote Jane Fonda, "Instead of safety nets we need to trampolines and ladders." Anything that can help us jump forward more quickly toward a better world is welcome in my book. I think this acquisition can do that — and so to my friends in Charleston and Austin, I say: We're counting on you. Let us know how we can help.